1.
The current ratio (assets/liabilities) of company X is 3.1. Given that
the current assets are $186000, find the current liabilities:
Assets = A
Liabilities = L
A / L = 3.1 => L = A / 3.1
A = 186000 => L = 18600 / 3.1 = 6000
Answer: $ 6000
2. The board of directors determines that the current ratio must never
be below 2.6. What is the maximum amount that the company can borrow?
A/L ≥ 2.6
=> L ≤ A / 2.6
=> L ≤ 186000 / 2.6
L ≤ 71538.46
Answer: $71538.46
